Is it a buyer’s or seller’s market?
It’s the No. 1 question propelling the luxury property market at the moment.
Interest rates are rising at a historic rate, right along with economic uncertainty. The stock market is down from last year. Could the luxury housing market be headed for a cooldown after the unprecedented gains of 2021?
The Trend Report: 2022 published by the Coldwell Banker Global Luxury® program aims to field these questions and more, using data and insights from an exclusive Censuswide/Coldwell Banker Global Luxury survey, the Institute for Luxury Home Marketing, and Wealth-X. You can read the full Trend Report or download it here.
In the meantime, Michael Altneu, Vice President of Global Luxury of Coldwell Banker Real Estate LLC, got an assist from M. Ryan Gorman, CEO of Coldwell Banker Real Estate LLC.
Michael AltneuEveryone wants to know: are we in a buyer’s market?
M. Ryan Gorman
M. Ryan GormanRight now the market appears to be in transition. The majority of markets we analyzed through August 2022 were still seller’s markets, but we can see that things started to shift in June. Inventory levels notched up for the first time in two years. Buyers are seeing less competition for homes. There are fewer properties with multiple offers and selling for over asking price. Sales have also begun to slow compared to last year. But inventory is still low, and it is not keeping up with demand. Prices are still rising too, albeit at a slower rate than 2021. That’s why we called our first trend: “an unconventional buyer’s market.” There’s a mix of dynamics happening, making it difficult to say definitely, “Yes, we’re in a buyer’s market. Or no, we’re still in a seller’s market.”
Michael AltneuAre there other factors that make it an unconventional buyer’s market?
M. Ryan Gorman
M. Ryan GormanThe Trend Report did a good job at highlighting the complexities, and almost contradictory nature of this current market. Not all locations are exhibiting the same conditions. Some places like Cincinnati and Greater Boston turned even more advantageous to luxury single-family home sellers so far this year. On the other side, you have a resort destination like Coeur d’Alene, Idaho, which was super hot during the pandemic, now turning friendlier to buyers looking for single-family homes. When you look at the luxury attached market, nearly all the locations we reviewed were still seller’s markets. While conditions could be gradually improving for buyers who are looking for these types of properties, inventory levels would need to come up before prices could come down. And that’s really the one caveat to all of this.
Michael AltneuEven if we do trend toward a balanced-to-buyer’s market by the end of this year, what makes you feel optimistic about luxury real estate?
M. Ryan Gorman
M. Ryan GormanI think it’s important for Luxury Property Specialists to keep things in perspective so they can effectively guide their clients through this new market. We just experienced a once-in-a-lifetime housing market during 2020 and 2021. Record sales. Record housing appreciation. Insatiable demand for bigger, better homes. Analyzing 2022 against 2021 is really not a fair comparison. We want to encourage Luxury Property Specialists to look at the big picture and consider the facts. When you view the numbers from 2019, a stable year by all accounts, inventory in 2022 is actually significantly lower, and both sales and prices are higher. Looking back even further, today’s luxury single-family home prices have seen 60% appreciation since 2017. Luxury attached home prices increased nearly 41% from 2017. Real estate is often considered a hedge against inflation. And our Censuswide survey really highlights the strength of real estate’s position: nearly 80% of affluent respondents believe that real estate is a safe investment. Homeownership will always be a powerful asset class for the wealthy.